Does Flexibility in Human Resource Practices Increase Innovation? Mediating Role of Intellectual Capital

Abstract

Building on resource-based view theory, this article investigates the impact of human resource practice flexibility (HRPF) on innovation performance with (a) the mediating role of intellectual capital (IC) and (b) moderating role of the industry type (service or manufacturing) of an organisation. We empirically examined the relations using a survey dataset of managers of 257 Indian organisations. We have used the structural equation modelling method for data analysis. Findings of the moderated mediation analysis revealed that IC mediates the relationship between HRPF and innovation performance (a) partially when the organisation operates in the service industry and (b) fully when an organisation operates in the manufacturing industry. Additionally, our study explains the underlying mechanism governing the same relationship.